CALGARY – Federal Immigration and Citizenship Minister Jason Kenney is confident that China National Offshore Oil Co. will follow through with its end of the bargain after the government approved its $15.1-billion takeover of Nexen Inc.
The Harper government approved the foreign takeovers of Nexen (TSX:NXY) by China National Offshore Oil Co., or CNOOC, and Progress Energy Resources Corp. (TSX:PRQ) by Malaysia’s Petronas earlier this month.
At the same time, it updated the rules around such deals.
In the future, all state-owned enterprises seeking to buy large Canadian companies will face greater scrutiny about how they operate and how much control their home governments would have over how they do business.
“We’ve clarified the rules to say that this is the end of a trend…not the beginning of one. We will not permit foreign governments to establish control of Canada’s energy industry and the oilsands in particular,” Kenney said Monday in a year-end interview with reporters in Calgary.
While CNOOC promised to keep Nexen’s head office in Calgary and create more Canadian jobs, other key details of the controversial mega deal aren’t being released.
Kenney didn’t fill in any of the blanks but did say Canada intended to make sure CNOOC abided by the deal that it made.
“This is a challenge for us to ensure that the companies who provided undertakings do actually comply and we’ll do everything we can to ensure that happens,” said Kenney.
“The undertakings that are made by a company in an acquisition like this are a private matter that we’re not at discretion to release publicly,” he said.
“But we will certainly expect that the company respect all of its undertakings. I’ll leave that up to the minister of industry to figure out how that’s applied but we’re confident they’ll be respected.”
CNOOC still has more hoops to jump through before the Nexen deal closes, including U.S. regulatory approval, as Nexen has operations in the Gulf of Mexico.
Kenney said Canada’s involvement in the matter is now over and the government will allow CNOOC to pursue its own approvals south of the border.
He said at this point he doesn’t see the foreign takeover rules being expanded to include joint ventures.
“It depends on the joint venture. If it’s merely a greenfield development where there’s a foreign investor coming in and they are in a minority, non-controlling interest that would probably not be reviewable under the Investment Canada Act,” he said.
“If we see that there is a foreign state-owned company that is clearly tightly controlled by a foreign government and they would have a disproportionately large influence on an industry in Canada like oil and gas, we would be disinclined to approve such an acquisition.”